Holwell Securities Ltd v Hughes

Last updated

Holwell Securities Ltd v Hughes
1st National Standard box.jpg
Decided5 November 1973
Citation(s)[1974] 1 WLR 155
[1974] 1 All ER 161
Case history
Appealed from[1971] 1 WLR 757
Court membership
Judge(s) sitting Lawton LJ
Russell LJ
Buckley LJ
Keywords
Offer and acceptance, postal rule

Holwell Securities Ltd v Hughes [1974] 1 WLR 155 is an English contract law case overriding the usual postal rule.

Contents

Ordinarily, a contractual offer can be deemed to be accepted when it leaves the offeree and enters the postal system but in this case, the original offer clearly stipulated the method by which acceptance was to take place, and this superseded the normal operation of postal rule.

Facts

The defendant, Dr Hughes, had granted an option with respect to his property at 571 High Road, Wembley, to the claimants, Holwell Securities Ltd, giving the claimants the irrevocable right to purchase the property during the option period for the specified sum. It contained a clause stipulating that there must be notice (here, receipt of the offer) in writing within six months in order to exercise the option. The claimants sent a letter on 14 April 1972 [1] purporting to exercise the option. It was lost in the mail and was never received by the defendant. [2] The defendant then refused to complete upon the purchase and the claimants sought specific performance.

Judgment

At first instance the claim was dismissed by Templeman J (reported at [1971] 1 WLR 757).

On appeal it was held, dismissing the appeal, that the postal acceptance rule does not apply in every case, even if the parties involved anticipate dealing by post and consider the post to be an acceptable means of communication.

Russell LJ applied the case of Hare v Nicholl [1966] 2 QB 130, and asserted on that authority that options represent a special case, and that the grantee (here, the plaintiff) must comply strictly with the conditions stipulated for exercise by the offeror (the defendant in this case). As this had not happened, the claim failed. He then went on to consider the position in relation to the postal rule generally (which he referred to as "the roundabout path to the same result"). In relation to this he concluded based upon earlier authorities that although the postal acceptance rule was a rule of general application, it did not apply when there are express terms in the offer which exclude it, and this includes excluding it by implication where the offer specifies that acceptance must reach the offeror.

The Court also suggested obiter dictum that the rule ought not to apply in cases where its application would produce manifest inconvenience and absurdity. More broadly, the Court states that the rule does not apply if when looking at all the circumstances, it is apparent that the parties could not have intended a binding agreement until notice of acceptance was communicated to the offeror.

Russell LJ added that although the parties had had a telephone conversation, this did not constitute the requisite notice of acceptance as laid out in the offer.

Lawton LJ gave a concurring judgment.

Significance

This case set a precedent for overriding the postal rule.

See also

Notes

  1. Moles, R. N., (ed.), Networked Knowledge - Contract Law Casenotes: Holwell Securities Ltd v Hughes [1974] 1 WLR 155, accessed 5 September 2023
  2. "Holwell Securities Ltd. v. Hughes" (PDF). Thomson Reuters. Retrieved 26 October 2016.

Related Research Articles

In English civil litigation, costs are the lawyers' fees and disbursements of the parties.

<span class="mw-page-title-main">Option contract</span>

An option contract, or simply option, is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer". Option contracts are common in relation to property and in professional sports.

<span class="mw-page-title-main">Estoppel in English law</span>

Estoppel in English law is a doctrine that may be used in certain situations to prevent a person from relying upon certain rights, or upon a set of facts which is different from an earlier set of facts.

<span class="mw-page-title-main">Offer and acceptance</span> Two components of agreement

Offer and acceptance are generally recognised as essential requirements for the formation of a contract, and analysis of their operation is a traditional approach in contract law. This classical approach to contract formation has been modified by developments in the law of estoppel, misleading conduct, misrepresentation, unjust enrichment, and power of acceptance.

<i>Macmillan Inc v Bishopsgate Investment Trust plc (No 3)</i>

Macmillan Inc v Bishopsgate Investment Trust plc [1995] EWCA Civ 55, [1996] WLR 387 is a judicial decision relating to English trusts law and conflict of laws case from the Court of Appeal. The issue arose in relation to frauds conducted by the late Robert Maxwell.

Loss of chance in English law refers to a particular problem of causation, which arises in tort and contract. The law is invited to assess hypothetical outcomes, either affecting the claimant or a third party, where the defendant's breach of contract or of the duty of care for the purposes of negligence deprived the claimant of the opportunity to obtain a benefit and/or avoid a loss. For these purposes, the remedy of damages is normally intended to compensate for the claimant's loss of expectation. The general rule is that while a loss of chance is compensable when the chance was something promised on a contract it is not generally so in the law of tort, where most cases thus far have been concerned with medical negligence in the public health system.

In English law, remoteness between a cause of action and the loss or damage sustained as a result is addressed through a set of rules in both tort and contract, which limit the amount of compensatory damages available for a wrong.

<i>Entores Ltd v Miles Far East Corp</i> Landmark 1955 English court decision

Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 is a landmark English Court of Appeal decision in contract law relating to the moment of acceptance of a contract agreed over telex. Denning LJ found that the regular postal rule did not apply for instantaneous means of communications such as a telex. Instead, acceptance occurs when and where the message of acceptance is received.

Asset freezing is a form of interim or interlocutory injunction which prevents a defendant to an action from dealing with or dissipating its assets so as to frustrate a potential judgment. It is widely recognised in other common law jurisdictions and such orders can be made to have world-wide effect. It is variously construed as part of a court's inherent jurisdiction to restrain breaches of its process.

A person who is found to have published a defamatory statement may evoke a defence of innocent dissemination, which absolves them of liability provided that they had no knowledge of the defamatory nature of the statement, and that their failure to detect the defamatory content was not due to negligence. The defence, sometimes also known as "mechanical distributor", is of concern to Internet Service Providers because of their potential liability for defamatory material posted by their subscribers.

<i>Henthorn v Fraser</i> 1892 English-Welsh contract law case on the postal rule

Henthorn v Fraser [1892] 2 Ch 27 is a decision of the Court of Appeal of England and Wales dealing with the postal rule in English law of contract formation.

<span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

<span class="mw-page-title-main">Agreement in English law</span>

In English contract law, an agreement establishes the first stage in the existence of a contract. The three main elements of contractual formation are whether there is (1) offer and acceptance (agreement) (2) consideration (3) an intention to be legally bound.

The Household Fire and Carriage Accident Insurance Company (Limited) v Grant (1878–79) LR 4 Ex D 216 is an English contract law case concerning the "postal rule". It contains an important dissenting judgment by Bramwell LJ, who wished to dispose of it.

<i>City and Westminster Properties (1934) Ltd v Mudd</i> English contract law case

City and Westminster Properties (1934) Ltd v Mudd [1959] Ch 129 is an English contract law case, regarding the parol evidence rule. It illustrates one of the large exceptions, that a written document is not deemed to be exhaustive of the parties intentions when there is clear evidence of a collateral contract. It shows that even evidence from outside a written agreement may contradict evidence inside it.

<i>OBrien v MGN Ltd</i>

O’Brien v MGN Ltd [2001] EWCA Civ 1279 is an English contract law case, concerning incorporation of terms through reasonable notice.

<i>Jennings v Rice</i>

Jennings v Rice is an English land law case concerning proprietary estoppel.

<span class="mw-page-title-main">Penalties in English law</span>

Penalties in English law are contractual terms which are not enforceable in the courts because of their penal character. Since at least 1720 it has been accepted as a matter of English contract law that if a provision in a contract constitutes a penalty, then that provision is unenforceable by the parties. However, the test for what constitutes a penalty has evolved over time. The Supreme Court most recently restated the law in relation to contractual penalties in the co-joined appeals of Cavendish Square Holding BV v Talal El Makdessi, and ParkingEye Ltd v Beavis.

<span class="mw-page-title-main">Power of acceptance</span> Concept in contract law

Power of acceptance is a concept of contract law. It refers to the power vested in the offeree by the offeror through the offer being made. It is used to determine whether the acceptance of an offer is valid.

<i>Byers v Saudi National Bank</i>

Byers v Saudi National Bank[2024] UKSC 51 is a decision of the Supreme Court of the United Kingdom in the long running litigation between the liquidators of SAAD Investments Company Limited and various parties relating to the alleged defrauding of the insolvent company by one of its principals.

References